<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1999 or
----------------------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from__________________to__________________
Commission file number 0-25731
----------------------------------------------------
Wells Real Estate Fund XI, L.P.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2250094
- ------------------------------- -----------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
--------------
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------
<PAGE>
Form 10-Q
---------
Wells Real Estate Fund XI, L.P.
-------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1999
and December 31, 1998................................... 3
Statement of Income for the Three
Months ended March 31, 1999 and 1998.................... 4
Statement of Partners' Capital for the Year Ended
December 31, 1998 and the
Three Months Ended March 31, 1999....................... 5
Statement of Cash Flows for the Three Months
Ended March 31, 1999 and 1998........................... 6
Condensed Notes to Financial Statements.................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................... 9
PART II. OTHER INFORMATION..................................................... 20
</TABLE>
2
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(a Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets March 31, 1999 December 31, 1998
------ -------------- -----------------
<S> <C> <C>
Cash and cash equivalents $ 8,163,352 $ 9,292,800
Investment in Joint Ventures (Note 4) 5,843,448 4,997,787
Deferred project costs (Note 2) 339,830 375,246
Organizational Costs, less accumulated amortization
of $6,250 in 1998 and $7,812 in March , 1999 23,438 25,000
Due from Affiliates 130,298 126,692
Prepaid expenses and other assets 26,990 26,990
----------- -----------
Total assets $14,527,356 $14,844,515
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Due to Affiliates $ 934 $ 88,473
Partnership distributions payable 195,440 141,007
Sales commissions payable 0 214,609
----------- -----------
Total liabilities 196,374 444,089
----------- -----------
Partners' capital:
Limited partners:
Class A 1,302,942 11,418,247 11,439,315
Class B 350,338 2,912,635 2,961,011
Original limited partner 100 100
----------- -----------
Total partners' capital 14,330,982 14,400,426
----------- -----------
Total liabilities and partners' capital $14,527,356 $14,844,515
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
3
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(a Georgia Public Limited Partnership)
STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Equity in income of joint ventures $ 88,677 $ 0
Interest income 71,822 7,005
-------- ------
160,499 7,005
Expenses:
Accounting & Legal 14,210 0
Partnership Administration 17,068 2,324
Computer cost 1,664 0
Amortization 1,562 0
-------- ------
34,504 2,324
-------- ------
Net income $125,995 $4,681
======== ======
Net income allocated to Class A Limited Partners $174,372 $4,681
Net loss allocated to Class B Limited Partners $(48,377) $ 0
Net income per Class A weighted average Limited Partner Unit $ .13 $.04
Net loss per Class B weighted average Limited Partner Unit $ (.14) $ 0
Cash distribution per weighted average Class A Limited
Partner Unit $ .15 $ 0
</TABLE>
See accompanying condensed notes to financial statements.
4
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(a Georgia Public Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
Limited Partners Total
-----------------------------------------------
Class A Class B General Partners'
------------------------ ---------------------
Original Units Amounts Units Amounts Partners Capital
-------- --------- ------------- ------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1997 $ 100 - $ - - $ - $ 500 $ 600
Limited partner contributions 0 1,302,942 13,029,423 350,338 3,503,378 0 16,532,801
Net income (loss) 0 0 254,862 0 (111,067) (500) 143,295
Sales commissions and discounts 0 0 (1,237,834) 0 (332,821) 0 (1,570,655)
Other offerings expenses 0 0 (366,255) 0 (98,479) 0 (464,734)
Partnership distributions 0 0 (240,881) 0 (14,195) 0 (240,881)
----- --------- ----------- ------- ---------- ----- -----------
BALANCE,
December 31, 1998 100 1,302,942 11,439,315 350,338 2,961,011 0 14,400,426
Net income (loss) 0 0 174,372 0 (48,377) 0 125,995
Partnership distributions 0 0 (195,440) 0 0 0 (195,440)
----- --------- ----------- ------- ---------- ----- -----------
BALANCE
March 31, 1999 $ 100 1,302,942 $11,418,247 350,338 $2,912,634 0 $14,330,981
===== ========= =========== ======= ========== ===== ===========
</TABLE>
See accompanying condensed notes to financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(a Georgia Public Limited Partnership)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
--------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 125,995 $ 4,681
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Equity in income of Joint Venture (88,677) 0
Changes in assests and liabilities
Amortization of organization costs 1,562 0
Decrease in account payable (214,609) 0
Increase in prepaid expenses and other assets 0 (5,048)
(Decrease) increase due to affiliates 3,606 48,721
----------- ----------
Net cash (used in) provided by operating activities (172,123) 48,354
----------- ----------
Cash flow from investing activities:
Distributions received from joint ventures 125,827 0
Investment in joint venture (851,000) 0
Deferred project costs 0 (89,989)
----------- ----------
Net cash used in investing activities (725,173) (89,989)
----------- ----------
Cash flow from financing activities:
Limited partners' contributions 0 2,571,118
Sales commissions paid 0 (127,937)
Offering costs 0 (77,133)
Distribution to Partners from accumulated
earnings (141,007) (0)
----------- ----------
Net cash (used in) provided by financing activities (141,007) 2,366,048
----------- ----------
Net (decrease) increase in cash and cash equivalents (1,129,448) 2,324,413
Cash and cash equivalents, beginning of year 9,292,800 600
----------- ----------
Cash and cash equivalents, end of period $ 8,163,352 $2,325,013
=========== ==========
Supplemental disclosure of noncash investing activities:
Deferred project costs applied to joint venture
property $ 35,417 $ 0
=========== ==========
</TABLE>
See accompanying condensed notes to financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statements
March 31, 1999
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
-----------
Wells Real Estate Fund XI, L.P. (the "Partnership") is a Georgia public
limited partnership having Leo F. Wells, III and Wells Partners, L.P., as
General Partners. The Partnership was formed on June 20, 1996, for the
purpose of acquiring, developing, owning, operating, improving, leasing,
and otherwise managing for investment purposes, income producing commercial
properties.
On December 31, 1997, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10.00 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933.
The Partnership commenced active operations on March 3, 1998, when it
received and accepted subscriptions for 125,000 units. An aggregate
requirement of $2,500,000 of offering proceeds was reached on March 30,
1998, thus allowing for the admission of New York and Pennsylvania
investors in the Partnership. As of March 31, 1999, the Partnership had
sold 1,302,942 Class A status Units, and 350,338 Class B Status Units, held
by a total of 1,250 and 95 Class A and Class B Limited Partners,
respectively, for total Limited Partner capital contributions of
$16,532,802. After payment of $578,648 in acquisition and advisory fees
and expenses, payment of $2,066,600 in selling commissions and organization
and offering expenses, the investments of $3,333,810 in the Fubd IX-X-XI-
REIT Joint Venture, and the investments of $2,398,767 in the Fund X-XI
Joint Venture, as of March 31, 1999, the Partnership was holding net
offering proceeds of $8,154,977 available for investments in additional
properties.
The Partnership owns interests in properties through equity ownership in
the following joint ventures: (i) the Fund X and Fund XI Joint Venture, a
joint venture between the Partnership and Wells Real Estate Fund X, L.P.
(the "Fund X-XI Joint Venture"), and (ii) the Fund IX-X-XI-REIT Joint
Venture, a joint venture between the Partnership and Wells Real Estate Fund
IX, L.P., Wells Real Estate Fund X, L.P., and Wells Operating Partnership,
L.P. ("Wells OP"), a Delaware limited partnership having Wells Real Estate
Investment Trust, Inc., as general partner (the "Fund IX-X-XI-REIT Joint
Venture").
As of March 31, 1999, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a
three-story office building in Knoxville, Tennessee (the "ABB Building")
which is owned by the Fund IX-X-XI-REIT Joint Venture; (ii) a two-story
office building in Bolder County, Colorado (the "Ohmeda Building") which is
owned by Fund IX-X-XI-REIT Joint Venture; (iii) a three-story
7
<PAGE>
office building located in Broomfield, Colorado (the "360 Interlocken
Building") which is owned by Fund IX-X-XI-REIT Joint Venture; (iv) a one-
story office building located in Oklahoma City, Oklahoma (the"Lucent
Technologies Building") which is owned by Fund IX-X-XI-REIT Joint Venture;
(v) a single-story warehouse and office building located in Ogden, Weber
County, Utah (the "Iomega Building") which is owned by Fund IX-X-XI-REIT
Joint Venture; (vi) a two-story office building located in Fremont,
California (the "Fairchild Building") which is owned by Wells/Fremont
Associates (the "Fremont Joint Venture"), a joint venture between the Fund
X-XI Joint Venture and Wells OP, and (vii) a one-story office and warehouse
building located in Fountain Valley, California (the "Cort Building") which
is owned by Wells/Orange County Associates (the "Cort Joint Venture"), a
joint venture between the Fund X-XI Joint Venture and Wells OP.
(b) Basis of Presentation
--------------------------
The financial statements of Wells Real Estate Fund XI, L.P. (the
"Partnership") have been prepared in accordance with instructions to Form
10-Q and do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These quarterly statements have not been examined by independent
accountants, but in the opinion of the General Partners, the statements for
the unaudited interim periods presented include all adjustments, which are
of a normal and recurring nature, necessary to present a fair presentation
of the results for such periods. For further information, refer to the
financial statements and footnotes included in the Partnership's Form 10-K
for the year ended December 31, 1998.
(2) Deferred Project Costs
----------------------
The Partnership pays acquisition and advisory fees and expenses to Wells
Capital, Inc., for acquisition and advisory services. These payments, as
provided by the Partnership Agreement, may not exceed 3.5% of the Limited
Partners' capital contributions. Acquisition and advisory fees and expenses
paid as of March 31, 1999, amounted to $578,648 and represented
approximately 3.5% of the Limited Partners' capital contributions received.
These fees are allocated to specific properties as they are purchased.
(3) Deferred Offering Costs
-----------------------
Wells Capital, Inc. (the "Company"), the general partner of Wells Partners,
L.P., pays all the offering expenses for the Partnership. The Company may
be reimbursed by the Partnership to the extent that such offering expenses
do not exceed 3% of total Limited Partners' capital contributions. As of
March 31, 1999, the Partnership had reimbursed the Company for $495,984 in
offering expenses, which amounted to approximately 3% of Limited Partners'
capital contributions.
8
<PAGE>
(4) Investments in Joint Ventures
-----------------------------
The Partnership owns interests in several properties as of March 31, 1999
through its ownership of joint ventures. The Partnership does not have
control over the operations of the joint ventures; however it does exercise
significant influence. Accordingly investments in joint ventures is
recorded on the equity method. For further information on investments in
joint ventures, see Form 10-K for the Partnership for the year ended
December 31, 1998.
The following describes additional information about the properties in which the
Partnership owned an interest as of March 31, 1999:
Fund IX-X-XI-REIT Joint Venture
- -------------------------------
Iomega Building
- ---------------
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a 4.0 acre
tract of vacant land adjacent to the Iomega Building located in Ogden, Utah.
This site is intended for additional parking and loading dock area and will
include at least 400 new parking stalls and new site work for truck maneuver
space, in accordance with the requirements of the tenant and the city of Ogden.
The expected completion date of this project is July 1, 1999. The tenant,
Iomega Corporation, has agreed to extend the term of its lease to April 30, 2009
and will pay as additional rent an amount equal to thirteen percent (13%) per
annum payable in monthly installments of the direct and indirect cost of
acquiring the property and construction of improvements. This additional rent
is due and payable commencing on May 1, 1999.
The land was purchased at a cost of $212,000 excluding acquisition costs. It is
anticipated that the total cost to complete the project will be $612,689. The
funds used to acquire the land and for the improvements were funded entirely out
of capital contributions made by the Partnership in the amount of $851,000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- -------------------------------------------------------------------------
RESULTS OF OPERATION.
- ---------------------
The following discussion and analysis should be read in conjunction with the
accompanying financial statements of the Partnership and notes thereto. This
Report contains forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934,
including discussion and analysis of the financial condition of the Partnership,
anticipated capital expenditures required to complete certain projects, amounts
of cash distributions anticipated to be distributed to Limited Partners in the
future and certain other matters. Readers of this Report should be aware that
there are various factors that could cause actual results to differ materially
from any forward-looking statement made in this Report, which include
construction costs which may exceed estimates, construction delays, lease-up
risks, inability to obtain new tenants upon expiration of existing leases, and
the potential need to fund tenant improvements or other capital expenditures out
of operating cash flow.
9
<PAGE>
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
As of March 31, 1999, the developed properties owned by the Partnership were
99.8% occupied. Gross revenues of the Partnership of $160,499 and $7,005 for
the three months ended March 31, 1999 and 1998, respectively. The increase was
attributable primarily to interest income earned on funds held by the
Partnership prior to the investment in properties and equity in income joint
ventures. Expense of the Partnership were $34,504 for the three months ended
March 31, 1999 and $2,324 for the same period in 1998. This increase was due to
an increase in administrative salaries as well as accounting and legal expenses,
computer costs and amortization expense.
Net income per weighted average unit for Class A Limited Partners was $0.13 and
$0.04 for the three months ended March 31, 1999 and 1998, respectively.
The Partnerships' distributions from net cash from operations accrued to Class A
units holders for the first quarter if 1999 was $0.15 per weighted average unit.
There were no distributions for the same period in 1998.
Year 2000
- ---------
The Partnership is presently reviewing the potential impact of Year 2000
compliance issues on its information systems and business operations. A full
assessment of Year 2000 compliance issues was begun in late 1997 and was
completed by March 31, 1999. Renovations and replacements of equipment have
been and are being made as warranted. The costs incurred by the Partnership and
its affiliates thus far for renovations and replacements have been immaterial.
Some testing of systems has begun and all testing is expected to be complete by
June 30, 1999.
As to the status of the Partnership's information technology systems, it is
presently believed that all major systems and software packages with the
exception of the accounting and property management package are Year 2000
compliant. The Partnership's affiliated entities are purchasing the upgrade for
the accounting and property management package system; however, it is not
expected to be available until the end of the second quarter of 1999. At the
present time, it is believed that all non-major information technology systems
are Year 2000 compliant. The cost to upgrade any non-compliant systems is
believed to be immaterial.
The Partnership is in the process of confirming with the Partnership's vendors,
including third-party service providers such as banks, that their systems will
be Year 2000 compliant. Based on the information received thus far, the primary
third-party service providers with which the Partnership has relationships have
confirmed their Year 2000 readiness.
The Partnership relies on computers and operating systems provided by equipment
manufacturers, and also on application software designed for use with its
accounting, property management and investment portfolio tracking. The
Partnership has preliminarily determined that any costs, problems or
uncertainties associated with the potential consequences of Year 2000 issues are
not expected to have a material impact on the future operations or financial
condition of the Partnership. The Partnership will perform due diligence as to
the Year 2000 readiness of each property owned by the Partnership and each
property contemplated for purchase by the Partnership.
10
<PAGE>
The Partnership's reliance on embedded computer systems (i.e., microcontrollers)
is limited to facilities related matters, such as office security systems and
environmental control systems.
The Partnership is currently formulating contingency plans to cover any areas of
concern. Alternate means of operating the business are being developed in the
unlikely circumstance that the computer and phone systems are rendered
inoperable. An off-site facility from which the Partnership could operate is
being sought as well as alternate means of communication with key third-party
vendors. A written plan is being developed for testing and dispensation to each
staff member of the General Partner of the Partnership.
Management believes that the Partnership's risk of Year 2000 problems is
minimal. In the unlikely event there is a problem, the worst case scenarios
would include the risks that the elevator or security systems within the
Partnership's properties would fail or the key third-party vendors upon which
the Partnership relies would be unable to provide accurate investor information.
In the event that the elevator shuts down, the Partnership has devised a plan
for each building whereby the tenants will use the stairs until the elevators
are fixed. In the event that the security system shuts down, the Partnership
has devised a plan for each building to hire temporary on-site security guards.
In the event that a third-party vendor has Year 2000 problems relating to
investor information, the Partnership intends to perform a full system back-up
of all investor information as of December 31, 1999 so that the Partnership will
have accurate hard-copy investor information.
Liquidity and Capital Resources
- -------------------------------
The Partnership expects to continue to meet its short-term liquidity
requirements generally through net cash provided by operations which the
Partnership believes will continue to be adqquate to meet both operating
requirements and distributions to limited partners. At this time, given the
nature of the joint ventures in which the Partnership has invested, there are no
known improvements or renovations to the properties expected to be funded from
cash flow from operations.
The Partnership expects to make future real estate investments, directly or
through investments in joint ventures from limited partners' capital
contributions. As of March 31, 1999, the Partnership was holding $8,154,977
available for investment in additional properties.
11
<PAGE>
Property Operations
- -------------------
As of March 31, 1999, the Partnership owned interests in the following
operational properties:
The ABB Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
--------------- ---------------
<S> <C> <C>
Revenues:
Rental income $260,092 $190,986
Interest Income 15,060 0
-------- --------
275,152 190,986
-------- --------
Expenses:
Depreciation 134,100 91,094
Management & leasing expenses 21,386 25,282
Operating costs, net of reimbursements (11,607) 37,768
-------- --------
143,879 154,144
-------- --------
Net income $131,273 $ 36,842
======== ========
Occupied % 98.2% 67%
Partnership's ownership % in the
Fund IX-X-XI-REIT Joint Venture 8.8% 0%
Cash distribution to Partnership $ 19,507 $ 0
Net income allocated to the Partnership $ 9,722 $ 0
</TABLE>
ABB Environmental Systems, a subsidiary of ABB, Inc., occupied its leased space
of 56,012 rentable square feet comprising approximately 67% of the building in
December 1997. The initial term of the lease is 9 years and 11 months. ABB has
the option to extend the initial term of the lease for two consecutive five year
periods. The annual base rent payable during the initial term is $646,250
payable in equal monthly installments of $53,854 during the first five years and
$728,750 payable in equal monthly installments of $60,729 during the last four
years and 11 months of the initial term. The annual base rent for each extended
term will be at market rental rates. In addition to the base rent, ABB is
required to pay additional rent equal to its share of operating expenses during
the lease term. Another tenant has occupied 23,490 rentable square feet
bringing the occupancy to 98%.
Wells Fund IX contributed an additional $79,566 towards the completion of this
project. It is currently anticipated that the total cost to complete the
project will be approximately $90,434, to the contributed by Wells Fund IX.
12
<PAGE>
Rental income increased in 1999 over 1998 due primarily to the increased
occupancy level of the property. Total expenses decreased due to an offset of
tenant reimbursements in operating costs, which resulted in a negative number.
Cash distributions for the quarter increased significantly in 1999 over 1998
amount. The Partnership was admitted to the Fund IX-X-XI-REIT Joint Venture on
June 11,1998 and, accordingly, began participating in net income and
distributions in June 1998.
Lucent Technologies Building / Fund IX-X-XI-REIT Joint Venture
- --------------------------------------------------------------
Three Months Ended
------------------
March 31, 1999
--------------
Revenues:
Rental income $145,752
--------
Expenses:
Depreciation 45,801
Management & leasing expenses 5,370
Other operating expenses 3,014
--------
54,185
--------
Net income $ 91,567
========
Occupied % 100%
Partnership's ownership % in the
Fund IX-X-XI-REIT Joint Venture 8.8%
Cash distributed to Partnership $ 9,286
Net income allocated to the Partnership $ 6,747
On June 24, 1998, Fund IX-X-XI-REIT Joint Venture acquired a one-story office
building containing approximately 57,186 rentable square feet on a 5.3 acre
tract of land in Oklahoma City, Oklahoma (the "Lucent Technologies Building")
for a purchase price of $5,504,276, excluding acquisitions cost.
The Lucent Technologies Building was completed in January 1998 with Lucent
Technologies occupying the entire building. Under the terms of the lease, the
tenant is responsible for most utilities, property taxes and other operating
expenses.
Since the Lucent Technologies Building was purchased by the IX-X-XI-REIT Joint
Venture in June 1998, comparable income and expense figures for the period are
not available.
13
<PAGE>
Iomega Building / Fund IX-X-XI-REIT Joint Venture
- -------------------------------------------------
Three Months Ended
------------------
March 31, 1999
--------------
Revenues:
Rental income $123,873
--------
Expenses:
Depreciation 48,495
Management & leasing expenses 5,603
Other operating expense, net of reimbursements (1,713)
--------
52,385
--------
Net income $ 71,488
========
Occupied % 100%
Partnership's ownership % in the
Fund IX-X-XI-REIT Joint Venture 8.8%
Cash distributed to Partnership $ 8,566
Net income allocated to the Partnership $ 5,263
On April 1, 1998 the Wells Fund X acquired a two story office building
containing approximately 108,250 rentable square feet on a 8.03 acre tract of
land located in Ogden, Weber County, Utah (the "Iomega Building") for a purchase
price of $5,025,000.
On July 1, 1998, Wells Fund X contributed the Iomega Building to the Fund IX-X-
XI-REIT Joint Venture. The Partnership acquired an interest in the Iomega
Building and began participating in income and distribution from this property
as July 1, 1998. The entire Iomega Building is under a net lease with Iomega
Corporation until July 31, 2006, which was extended to April 30, 2009.
Since the Iomega Building was purchased in April 1998, comparative income and
expense figures for the prior year are not available. Other operating expenses
are negative for the first quarter due to tenant reimbursement reflected in this
category, including reimbursement from management fees.
14
<PAGE>
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Two Months Ended
------------------- -----------------
March 31, 1999 March 31, 1998
------------------- -----------------
<S> <C> <C>
Revenues:
Rental income $256,829 $134,084
-------- --------
Expenses:
Depreciation 81,576 54,384
Management & leasing expenses 11,618 0
Operating costs, net of reimbursements 363 (699)
-------- --------
93,557 53,685
-------- --------
Net income $163,272 $ 80,399
======== ========
Occupied % 100% 100%
Partnership's ownership % in the
Fund IX-X-XI-REIT Joint Venture 8.8% 0%
Cash distribution to Partnership $ 17,690 $ 0
Net income allocated to the Partnership $ 12,073 $ 0
</TABLE>
On February 13, 1998, Fund IX-X-XI-REIT Joint Venture acquired a two story
office building containing approximately 106,750 rentable square feet on a 15-
acre tract of land located in Louisville, Boulder County, Colorado for a
purchase price of $10,325,000 excluding acquisition costs. The Partnership
acquired an interest in this property on June 11, 1998.
The entire Ohmeda building is currently under a net lease with Ohmeda, Inc. The
lease currently expires in January 2005. The monthly base rental payable under
the lease is $83,709.79 through January 31, 2003; $87,890.83 from February 1,
2003 through January 31, 2004; and $92,249.79 from February 1, 2004 through
January 31, 2005. Under the lease, Ohmeda is responsible for all utilities,
taxes, insurance and other operating costs with respect to the Ohmeda Building
under the term of the lease. In addition, Ohmeda shall pay a $21,000 per year
management fee for maintenance and administrative services of the Ohmeda
Building. The Fund IX-X-XI-REIT Joint Venture, as landlord, is responsible for
maintenance of the roof, exterior and structural walls, foundations, other
structural members and floor slab, provided that the landlord's obligation to
make repairs specifically excludes items of cosmetic and routine maintenance
such as the painting of walls.
Since the Ohmeda Building was purchased in February 1998, comparative income and
expense figures are available for only two months of the prior quarter. The
Partnership was admitted to
15
<PAGE>
the Fund IX-X-XI-REIT Joint Venture on June 11, 1998, and accordingly, began
participating in net income and distributions in June 11, 1998.
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Month Ended One Month Ended
------------------ ----------------
March 31, 1999 March 31, 1998
------------------ ----------------
<S> <C> <C>
Revenues:
Rental income $206,522 $26,133
-------- -------
Expenses:
Depreciation 71,670 23,574
Management & leasing expenses 17,864 0
Operating costs, net of reimbursements (2,250) 0
-------- -------
87,284 23,574
-------- -------
Net income $119,238 $ 2,559
======== =======
Occupied % 100% 100%
Partnership's ownership % in the
Fund IX-X-XI-REIT Joint Venture 8.8% 0%
Cash distributed to Partnership $ 14,212 $ 0
Net income allocated to the Partnership $ 9,017 $ 0
</TABLE>
On March 20, 1998, Fund IX-X-XI-REIT Joint Venture acquired a three-story multi-
tenant office building containing the approximately 51,974 rentable square feet
on a 5.1 acre tract of land in Broomfield, Boulder County, Colorado for a
purchase price of $8,275,000, excluding acquisition costs.
The 360 Interlocken Building was completed in December 1996. The first floor
has multiple tenants and contain 15,599 rentable square feet; the second floor
is leased to ODS Technologies, L.P. and contains 17,146 rentable square feet;
and the third floor is leased to Transecon, Inc. and contains 19,229 rentable
square feet.
Since the 360 Interlocken Building was purchased in March 1998, comparable
income and expense figures for the prior year are available for only one month.
Operating costs were negative for the first quarter due to tenant reimbursements
being greater than operating expenses including reimbursements for management
and leasing expense.
16
<PAGE>
Cort Building / Wells / Orange County Joint Venture
- ---------------------------------------------------
Three Months Ended
------------------
March 31, 1999
--------------
Revenues:
Rental income $198,885
--------
Expenses:
Depreciation 46,641
Management & leasing expenses 7,590
Other operating expenses 8,172
--------
62,403
--------
Net income $136,482
========
Occupied % 100%
Partnership's ownership % in Wells/Orange
County Joint Venture 21.2%
Cash distributed to Partnership $ 41,166
Net income allocated to the Partnership $ 32,292
On July 31, 1998, the Cort Joint Venture acquired a one-story office and
warehouse building containing approximately 52,000 rentable square feet on a
3.65 acre tract of land in Fountain Valley, California (the "Cort Building") for
a purchase price of $6,400,000, excluding acquisitions costs.
The Cort Building is 100% occupied by one tenant with a 15-year lease term that
commenced on November 1, 1988 and expires on October 31, 2003. The monthly base
rent payable under the lease is $63,247 through April 30, 2001, at which time
the monthly base rent will be increased 10% to $69,574 for the remainder of the
lease term. The lease is a triple net lease, whereby the terms of the lease
require the tenant to reimburse the Cort Joint Venture of certain operating
expenses, as defined in the lease, related on the building.
Since the Cort Building was purchased in July 1988, comparable income and
expenses figures for the prior year are not available.
17
<PAGE>
Fairchild Building / Wells / Fremont Joint Venture
- --------------------------------------------------
Three Month Ended
-----------------
March 31, 1999
--------------
Revenues:
Rental income $225,210
Expenses:
Depreciation 71,382
Management & leasing expenses 9,324
Other operating expenses 1,000
--------
81,706
--------
Net income $143,504
========
Occupied % 100%
Partnership's ownership % 42%
Cash distributed to Partnership $ 18,999
Net income allocated to the Partnership $ 13,559
On July 21, 1998, the Wells/Fremont Joint Venture acquired a two-story warehouse
and office building containing approximately 58,424 rentable square feet on a
3.05 acre tract of land in Fremont, California (the "Fairchild Building") for a
purchase price of $8,900,000 excluding acquisitions costs.
The building is 100% occupied by Fairchild Technologies, U.S.A., Inc. with a
lease expiration of November 30, 2004. The monthly base rent payable under the
lease is $68,128 with a 3% increase on each anniversary of the commencement
date. The lease is a triple net lease, whereby the terms require the tenant to
reimburse the landlord for certain operating expenses, as defined in the lease,
related to the building.
Since the Fairchild Building was purchased in July of 1998, comparable income
and expense figures for the prior year are not available.
18
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the first quarter of 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
WELLS REAL ESTATE FUND XI, L.P.
(Registrant)
Dated: May 11, 1999 By: /s/ Leo F. Wells, III
----------------------------------
Leo F. Wells, III, as Individual
General Partner and as President
and Chief Financial
Officer of Wells Capital, Inc., the
General Partner of Wells Partners, L.P.
19
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<PAGE>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 8,163,352
<SECURITIES> 5,843,448
<RECEIVABLES> 130,298
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,990
<PP&E> 14,527,356
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<CURRENT-LIABILITIES> 196,374
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,330,982
<TOTAL-LIABILITY-AND-EQUITY> 14,527,356
<SALES> 0
<TOTAL-REVENUES> 160,499
<CGS> 0
<TOTAL-COSTS> 34,504
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<INCOME-PRETAX> 125,995
<INCOME-TAX> 125,995
<INCOME-CONTINUING> 125,995
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<EXTRAORDINARY> 0
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<NET-INCOME> 125,995
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